Any suggestions welcome...

[Mimi]

 

Hello

Like many, we came to France for a simple life. Having not made a clean financial break from England, it has now got quite complicated. To present the facts more or less chronologically:

o We are not married. My Partner David is 57 and I am 53.
o David sold up his property and business in UK at end of 2003.
o We bought a 2 barn property in France 27th Feb 2004 (en Tontine).
o We have lived in France from 1st April 2004.
o I sold my principal residence in England 20th Nov 2005.
o I bought a house in France in my name 23rd July 2005.
o We are in the process of buying a house and barn property in France (en Tontine) - completion should be end of Nov 2006.
o David continues to submit a UK tax return showing a small UK income under the UK threshold.
o I continue to submit a UK tax return for 2 UK rental properties. I have just sold one of these properties (8th Sept 2006) and intend to sell the other in 2007 or 2008. UK capital gains tax is due on the sold property.
o It may or may not be relevant, we have just applied for French medical care.

We want to sell the original 2 barn property in about a year, when we have renovated the house and barn we are just buying. The timescale is flexible.

Our big question is:

How do we efficiently sell the 2 barn property? Within 1 year? Within 2 or more years? Is it possible that the 2 barn property could be considered as secondaire because:

o I have had a UK principal residence up until Nov 2005 and French house since July 2005. We have lived in these properties together. Or ..

o The French house or the new hosue and barn property could now be considered our principal residence.


A smaller question is:

This is pre-empting the response to the big question- If I become tax resident imminently, I believe I continue to complete a UK tax return for my one rental property as it is UK rental income (true or false?) but who would I pay the capital gains tax to - plus any other payments, on the sale of this rental property in 2007/87. And how much?

If the above blurb is not clear, please let me know and I will clarify further.

I much appreciate your comments.

Best regards

[Sunday Driver]

Your preference for "not making a clean financial break with England" was ill advised, to be honest.

You say you arrived to live permanently in France on 1 April 2004 - that means you became tax resident from that date and you should have submitted a tax declaration in Spring 2005.  From the point of view of your property taxation status, your French tax residency would have confirmed your two barn property as your principal residence.  Your two subsequent house purchases would, of course, have been classed as secondary residences.

That being the case, the proposed sale of the two barn property would have attracted no CGT liability.  Also, by moving on into one of your other houses, you'd be re-establishing your principal residence as being in this house, leaving the remaining house solely as a secondary residence.

However, because you have not regularised your tax affairs, your problem is going to be having any of your current properties classified as a principal residence. 

So, you need to establish your French tax residency now - at your two barn property - before you place the property on the market.

 

 

 

[Mimi]

Many thanks Sunday Driver.  Will take your advice. Much obliged.